diff --git a/changelogs/fragments/extra_vars_unfrack.yml b/changelogs/fragments/extra_vars_unfrack.yml
new file mode 100644
index 00000000000..5700e1fff77
--- /dev/null
+++ b/changelogs/fragments/extra_vars_unfrack.yml
@@ -0,0 +1,2 @@
+bugfixes:
+  - Ensure we get full path for extra vars into cliargs to avoid realpath issues after initial load.
diff --git a/lib/ansible/cli/arguments/option_helpers.py b/lib/ansible/cli/arguments/option_helpers.py
index 0e7445423bf..dc3a88b53cb 100644
--- a/lib/ansible/cli/arguments/option_helpers.py
+++ b/lib/ansible/cli/arguments/option_helpers.py
@@ -106,6 +106,15 @@ def unfrack_path(pathsep=False):
     return inner
 
 
+def maybe_unfrack_path(beacon):
+
+    def inner(value):
+        if value.startswith(beacon):
+            return beacon + unfrackpath(value[1:])
+        return value
+    return inner
+
+
 def _git_repo_info(repo_path):
     """ returns a string containing git branch, commit id and commit date """
     result = None
@@ -345,7 +354,7 @@ def add_runas_prompt_options(parser, runas_group=None):
 
 def add_runtask_options(parser):
     """Add options for commands that run a task"""
-    parser.add_argument('-e', '--extra-vars', dest="extra_vars", action="append",
+    parser.add_argument('-e', '--extra-vars', dest="extra_vars", action="append", type=maybe_unfrack_path('@'),
                         help="set additional variables as key=value or YAML/JSON, if filename prepend with @", default=[])
 
 
diff --git a/test/integration/targets/inventory/1/2/3/extra_vars_relative.yml b/test/integration/targets/inventory/1/2/3/extra_vars_relative.yml
new file mode 100644
index 00000000000..fa50a5accdc
--- /dev/null
+++ b/test/integration/targets/inventory/1/2/3/extra_vars_relative.yml
@@ -0,0 +1,19 @@
+- hosts: localhost
+  gather_facts: false
+  vars:
+    conditions:
+      - my is defined
+      - my == 'var'
+      - "'webservers' in groups"
+      - "'web_host.example.com' in groups['webservers']"
+  tasks:
+    - name: Make sure all is loaded
+      assert:
+        that: '{{conditions}}'
+
+    - name: Reload inventory, forces extra vars re-eval from diff basedir
+      meta: refresh_inventory
+
+    - name: Make sure all is loaded, again
+      assert:
+        that: '{{conditions}}'
diff --git a/test/integration/targets/inventory/1/2/inventory.yml b/test/integration/targets/inventory/1/2/inventory.yml
new file mode 100644
index 00000000000..5082cef2f2e
--- /dev/null
+++ b/test/integration/targets/inventory/1/2/inventory.yml
@@ -0,0 +1,3 @@
+plugin: constructed
+groups:
+  webservers: inventory_hostname.startswith('web')
diff --git a/test/integration/targets/inventory/1/vars.yml b/test/integration/targets/inventory/1/vars.yml
new file mode 100644
index 00000000000..c11458438c4
--- /dev/null
+++ b/test/integration/targets/inventory/1/vars.yml
@@ -0,0 +1 @@
+my: var
diff --git a/test/integration/targets/inventory/runme.sh b/test/integration/targets/inventory/runme.sh
index 7ce16cf54ef..a5e40d55525 100755
--- a/test/integration/targets/inventory/runme.sh
+++ b/test/integration/targets/inventory/runme.sh
@@ -88,3 +88,9 @@ fi
 
 # ensure we don't traceback on inventory due to variables with int as key
 ansible-inventory  -i inv_with_int.yml --list "$@"
+
+# test in subshell relative paths work mid play for extra vars in inventory refresh
+{
+	cd 1/2
+	ansible-playbook -e @../vars.yml -i 'web_host.example.com,' -i inventory.yml 3/extra_vars_relative.yml "$@"
+}